Tuesday, February 08 2022
The cryptocurrency market is the perfect example of how hard it can be to predict the future. The price of cryptocurrencies fluctuates a lot. What's more, it is not very easy to find out when the best time to buy crypto is. However, some signs can help you figure this out.
If you're just getting started or investing in crypto for the first time, it's best to buy after you've done some research and educated yourself. This article will discuss the background of crypto, why people are buying it in such high volumes when the best time to buy crypto is, and how to do it in the simplest way possible. So make sure to stick to this guide till the end.
What is Cryptocurrency? - Let's Start with the Basics:
We know you're here to find out the best time to buy crypto and not get a lecture on what it is, but getting familiar with the concept of crypto IS VERY IMPORTANT! You need to know what you're getting into before putting your hard-earned money into it.
Simply put, cryptocurrency, or crypto for short, is a digital currency. Here, instead of transactions taking place through centralized financial institutions like Banks, crypto transactions are done on the blockchain (a distributed database that maintains and stores transaction records in a fully decentralized way).
Cryptocurrency is decentralized because its policies are governed by the users who mine or stake it on the blockchain called validators. The network of validators automatically verifies transactions happening on blockchain around the world, so the proof is stored in millions of computers in a secure, encrypted form.
Blockchain has changed the way people look at financial autonomy via a completely digital system of commerce. The main differentiating factors are transparency and ease of access because you just need the internet to purchase crypto. Plus, the use cases of crypto for payments are endless. You are not limited by the financial regulators on where to spend your own money; you can buy or sell whatever you like and do transactions in crypto.
The gist is that, like democracy, crypto is also for the people and by the people without the influence or control of any single entity. This brings freedom of usage to crypto users, which is not available to those using centralized currency.
What's the Reason Behind the Crypto Market's Explosive Growth?
Since Bitcoin's launch in 2009, the crypto industry has grown A LOT! With now more than 4,000 cryptocurrencies on the market, from decentralized finance (Defi) to NFTs, stablecoins, and more, the industry is still growing. In fact, the media and many investors, including Gary Vaynerchuk, believe the market is still in its early stages, especially after the introduction of NFTs.
The biggest sign of this massive continuous growth of the crypto market is how it is affecting surrounding institutions, with many financial institutions adopting its use, despite being against it early on. The adoption of crypto in recent years has increased significantly, with investment firms, businesses, and even banking institutions trying to incorporate it into their payment options and portfolios.
Moreover, governments are now starting to pay serious attention to incorporating stablecoins as central bank digital currencies (CBDCs). Even though the volatile nature of the crypto market may produce more reserved investors, they are still, including many conservative banking institutes, starting to suggest cryptocurrency use to diversify the portfolio.
With such a worldwide revolution in the adoption of crypto by both individuals and traditional financial institutes, the crypto market size is getting bigger with time.
Reasons Why People are Buying Crypto:
Now you know that there's a lot of potential in the crypto market, and it is still in its infancy stage. But you may wonder; what about those who didn't get into the game early on? Why are they buying it now? The simple answer is that crypto offers advantages that the traditional finance market doesn't. Let's have a look at them below:
Stay Above the Inflation:
The global economic condition is in front of everyone - and it's not looking good. If we just look at the U.S, then the annual inflation rate reached 7% in December 2021 from 1.4% in January 2021 - you can now imagine how things will be in coming years. Every day there's an increase in the cost of necessities, and the government is just putting a loose band-aid over this quickly spreading infection by printing more money. But as per the laws of economics, printing more fiat currency decreases its demand, resulting in inflation.
In contrast to the above, Bitcoin has a limit; it cannot be mined after a certain number of bitcoins (21 million) are created in the market. This puts a cap to the decrease in its value and actually points towards an overtime increase in the value because of the 21 million bitcoin limit. Many often refer to bitcoin as 'digital beachfront' or 'digital gold' just because of this limited supply. So those looking to beat the inflation in the future purchase and sit on their digital BTCs, typically for a few years and then sell for higher prices.
Invest in Fractions:
One of the benefits to investors interested in crypto is that they can purchase portions of the crypto assets instead of having to purchase the whole thing. For instance, if you want to invest in bitcoin, you don't have to purchase a full bitcoin to own it. You can buy a part of it depending on how much money you're comfortable with investing. So now, if bitcoin sees a rise in its value, the value of your portion of BTC will increase as well, giving you a return on your investment. You can purchase small portions of bitcoin or other cryptocurrencies whenever you have some loose cash lying around. With this approach, you can accumulate a big portfolio of different cryptocurrencies over time, including BTC, ETH, XRP, and so on!
So, Is There Still a Good Time to Buy Crypto?
The Crypto market has different facets, which is not the case with stocks, and this makes it possible for investors to get in the game at any time. There is no doubt that those who jumped on this bandwagon in 2009 saw the most returns on their investment when BTC was just equal to the cost of a Pizza. So yes, most people have missed that massive, life-changing opportunity, but that doesn't mean that there's no second best time to invest.
The current crypto market is still in its early stages, and it is gaining momentum at a remarkable pace, even after 10 years of consistent rise. Many powerful voices in the investing community, including Gary Vee, Elon Musk, Micheal Saylor, and Barry Silbert, are firm believers of this market's bright future. Plus, with the increase in the adoption of cryptocurrency by financial institutions, it's evident that right now is also a good time to dip your toes in this massive ocean.
Here's How You Can Get Started with Crypto Investing:
We are still at the start of this worldwide financial revolution called decentralized finance (or, in other words, the use of cryptocurrencies), so you are still not late to the party. All you need now is a few tools to get started to decrease your chances of losing money. Here's how you can get started:
Increase Your Knowledge:
The first step to investing is to educate yourself. If you're not a seasoned investor, you need to learn two kinds of analysis; technical (learning how to read charts and patterns of prices) and fundamental (learning how global changes like COVID19 affect the market). Make sure to hit YouTube and start from the basics, then read advanced books on crypto trading, and then start experimenting on demo accounts to get the hang of the game.
Join a Reputable Crypto Exchange:
You will need a platform to help you buy cryptocurrencies in exchange for your fiat money. This platform is called a crypto exchange, and there are many good ones out there, including Coinbase and Binance.
You can make accounts there and start with demo trading. Here, you trade dummy cryptocurrencies based on real-time market conditions just to get some experience and try out the techniques you learn on Youtube and in ebooks. Once you get good at it, you can then start investing small portions of money and go from there.
Every single transaction of a digital asset comes with some risk because even though you are making predictions based on the history of an asset, past performance doesn't guarantee future returns or results. Furthermore, cryptocurrencies have a high speculative nature, which means their price volatility is high, so the increase and decrease in value are faster than traditional financial assets. This increases the risk with a possibility of the cryptocurrency's value going down to zero or near it. While diversifying your portfolio can help with risk management, it does not assure profits or loss protection. Therefore, traders should keep their goals and the associated risks in mind before making trades. Previous gains of any asset may not represent other customers' experience or guarantee any future success.